What Is Futures Margin?
Futures margin is a good-faith deposit — not a loan or down payment. You don't borrow money to trade futures. Instead, you post collateral to guarantee you can cover potential losses. The exchange sets minimum margin requirements.
Initial vs Maintenance Margin
- Initial margin: Required deposit to open a position (set by exchange)
- Maintenance margin: Minimum balance to keep position open (typically 75-80% of initial)
- Margin call: When account drops below maintenance — you must add funds or close positions
Calculating Effective Leverage
Effective leverage = Contract Value ÷ Margin Required
Example: MNQ contract value at 18,500 = 18,500 × $2 = $37,000. Margin = $1,500. Leverage = $37,000 ÷ $1,500 ≈ 25:1
Why High Leverage Is Dangerous
At 25:1 leverage, a 4% adverse move wipes out your entire margin. Futures professionals manage risk through position sizing, not by relying on high leverage. Use the Futures Calculator to understand exactly what you're risking before trading.